New York's Cooperative and Condominium Community
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Politics and pitfalls of self-management
Self-management. For some co-op owners, nothing is more satisfying than being involved in the management and maintenance of their own building. This story talks about one co-op's experiences and some of the challenges a self-managed co-op faces.
Sweep the hallways, shovel snow, take out the trash, check the boiler: a day in the life of a diligent superintendent. But at 129-131 Bedford Avenue, these tasks – and more – belong to the shareholders.
This seven-unit co-op, based in Williamsburg, Brooklyn, has no managing agent or superintendent, and shareholders like it that way. “We can do other things with the money,” Ellen Covas, the board treasurer, says.
Built around 1890, the four-story, two-building property, was converted to cooperative status in 1984. Covas, who moved in two years before the conversion, recalls that back then her neighbors were mostly older, longtime residents with a renter’s mentality. Their primary view as new owners was they would now have a more secure place in the building – no one could kick them out.
But there was no new blood, and Covas ended up handling the bulk of the work. “It was hard for me because I pretty much ran the show,” she remembers. “They loved me and let me do what I wanted to do.”
As years passed, Bedford Avenue’s older shareholders became elderly and many were no longer able to handle rising maintenance payments, flights of stairs, or even the smallest of building chores. Some of them had accidentally caused small fires in their apartments. Younger shareholders had to find a way to solve a problem that, Covas points out, “would have been the landlord’s headache.” At one point, the board even considered selling the burdensome building back to a single owner so the older population could remain. But instead, shareholders helped these residents’ families become involved and, when necessary, helped them relocate to nursing homes.
The vacancies brought in a new type of shareholder – one excited about owning a co-op and wanting to be involved in running it. This was a relief for Covas, who when she married in the 1990s also gained a helper in her husband, Christopher. Nonetheless, sharing power was an adjustment for all.
“When people come into a building where everything is being taken care of by a small group of people, they may think that’s how that small group wants it,” Covas says. “Meanwhile, that small group may very much want other people to help, but they want to be comfortable that those people can do it responsibly.”
Little by little, Covas and the others adjusted as they realized new viewpoints really were helping. For example, she recalls the drywells at the bottom of the backyard steps. At least, she always thought they were drywells, because a very long time ago a resident told her so. A new shareholder, however, had his doubts and called in a service to check them. As it turned out, the drywells were actually drains. “I was so blinded by what other people told me 20 years ago that I never even thought to have it snaked out,” Covas admits. “It took me a transition period, but [I now feel that] the new people are great.”
Be warned, however: experts note the danger of perceived or planned transfers of power to newcomers in smaller co-ops. Boards should make perfectly clear that their participation is required, not an option.
“You can’t allow apartments to be sold in a tiny building if you’re not going to get the participation of the people who live there,” notes Mary Ann Rothman, executive director of the Council of New York Cooperatives & Condominiums (CNYC). New residents who abstain from participating “are not going to be part of the every-day solution. Instead, they will be part of the problem.”
Despite board members’ best efforts, this may yet prove true on Bedford Avenue. Currently only four of the seven apartments are occupied. The two vacant units are being renovated – one by a longtime previous tenant returning to the building, Al Sacco, and the other by two new shareholders, Sarah Milstein and Julia Kunin.
Milstein, a book editor with O’Reilly Media, found out about the available unit through a friend of a friend. Having once owned shares in a 45-unit Manhattan co-op that had an outside manager, she says the differences are stark. “In this building, everybody is on the board, and it’s up to the individuals to carry things out.”
But while one member of each unit is supposed to be an active director, this is not the case. For example, Bengie Santiago, the secretary, is a resident in her early twenties who grew up in her apartment and took it over when her mother returned to the Dominican Republic. And while board members say she is well-intentioned and liked, meetings are not her top priority.
So that’s one of the seven units down. Saco has been intermittently active. Two down, five to go. Dolores Peterson prefers to avoid meetings – three down – however, she does regularly speak with Hannah Wallace, the board president. And although Milstein has not yet moved in, she has attended the last few meetings, and hopes at some point, to assume the role of board secretary. But, due to her non-resident status, it is difficult for her to immerse herself in the co-op’s day-to-day business. Four down.
That leaves three board members – Covas, Wallace, and Kunin, who in October was just moving in to the building – to run everything, do everything, and oversee the building’s ongoing capital improvement projects such as a new roof and boiler and electrical upgrades. Covas’s husband, Christopher, and Wallace’s boyfriend, Michael Short, are equally involved and are, Wallace says, “indespensible.”
The small group acknowledges the pressure. “Sometimes I feel the co-op takes over my life and intrudes on my work schedule,” says Wallace, an editor at Travel + Leisure magazine. “When an emergency happens, you can’t put it off.” You also cannot separate work from home; Wallace knows those sitting near her at work can hear her co-op-related conversations. But she realizes this is inevitable, as certain matters cannot wait.
After living at the building for just a year, and being drafted as president almost immediately, Wallace understands how the previous president burnt herself out (she sold her shares and left the building). She said that, on average, she spends about 30 hours a month on the phone or conducting research. “I don’t think I’m going to be president forever, and I certainly hope I’m not going to be president for another year,” she says. “It does take its toll.”
Joe Restuccia, executive director of Manhattan-based Clinton Housing Development Corporation (CHDC), oversees the management of many converted brownstones and small buildings. He recalls his own days as a resident in a self-managed 20-unit building, before the tenant association hired CHDC as its managing agent and then later turned co-op.
“It was horrible,” he recalls. “People start out with the best of intentions but it’s a long-haul thing. There’s going to be some Saturday where you don’t want to sweep and then you don’t, and everybody’s going to get pissed off at you. The bloom wore off that rose after a while.”
Restuccia notes a typical self-managed small-building cycle: two or three residents are responsible, the others see this and know things are taken care of, so they step back. This, in turn, encourages resentment from those running the show, leading things to turn personal in an ugly way.
“It’s very hard to run a business when people have such intimate knowledge of each other,” he says. There is no buffer. A managing agent, however, can provide a layer of accountability separate from shareholders. Furthermore, he or she can provide peace of mind. “That extra maintenance really makes your daily life easier because you’re not so troubled,” he says.
Self-managed buildings can also encounter unexpected road blocks. Covas notes that only three of the ten contractors she called asking for bids on capital improvement work provided them. The others said they were too busy or would not deal with self-managed buildings. Restuccia notes this is because many contractors prefer working with larger management firms that often provide them with ongoing projects that make it worthwhile for the company to take on the firm’s smaller buildings or jobs. In such situations, costs can decrease, as well. “It’s not just building A, it’s building A, B, C, D, E, and F,” he says. “So you get a better deal.”
There is also the matter of self-managed buildings not being aware of new legal requirements. But so far, 129-131 Bedford Avenue has prevailed. Wallace says her previous job as a fact checker developed her research skills, which helped the board track down crucial information sources such as the CNYC and Habitat. Still, she notes that only recently did they find out about the 80/20 requirement, which states that a co-op cannot generate more than 20 percent of its income from non-shareholders and still be considered a co-op – an issue they now realize they must address.
Rothman of the CNYC says acquiring such knowledge can be a challenge for self-managed co-ops, which is why her organization offers sessions dubbed “small co-op support groups” about four times a year. These meetings help smaller buildings, some made up of as few as two units, comply with laws, stay notified of changes, and find appropriate expertise.
Everyone agrees that self-management is not easy. But while the residents of 129-131 Bedford may work hard, so far their efforts have been fruitful. Covas describes the great new tenant in their storefront unit – a clean, modern video store – as quite a contrast from the roach- and rodent-infested grocery that had the spot when she moved in. “Mostly because the neighborhood changed, we were able to evolve into other types of uses,” she says. The new tenant, there for about a year, “put in new security gates, sheetrocking, new floors, built-in shelving, all at their own expense.” Best of all, there is no more loitering.
In addition, the video store’s rent has allowed the co-op to avoid large maintenance increases. “We were busily keeping the building going, and then all of a sudden you turn around and are like, whoa! We were able to rent our storefront for a lot more money,” Covas says. They have also recently instituted a flip tax.
Milstein says she realizes her new home will present novel and different challenges from her previous, 45-unit building. But she has a positive outlook, having helped that building escape the clutches of an overpowering sponsor. Self-management will be a welcome change. “I wouldn’t say it exactly makes me feel more empowered,” she says. “I think it makes me feel like I have to take more responsibility for finding out the details to make decisions.”
“People change and get more active as time goes on,” notes Covas. “And then sometimes you get this wonderful surprise – you come home and the walk is shoveled.
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